Stability and Growth Pact

(Photo: EU Commission)
Was signed in 1997 to reaffirm the criteria for maintaining similar economies (convergence criteria) within the countries which have joined the single currency (the third stage of the EMU), that was introduced by the Treaty of Maastricht.

The legal basis in the TEC, Art. 104, was considered to be too vague and the term "excessive budget deficits" has been defined by a regulation and a special protocol.
The original protocol is complemented by the Stability and Growth Pact consisting of two Council Regulations and solemn political commitments.

The Stability Pact was decided after a resolution of the 1997 Amsterdam European Council. The Pact establishes a requirement for Member States to achieve and maintain budgetary positions of ‘close to balance or in surplus’. The pact requires Member States to keep their budget deficits (a deficit occurs when public spending is greater than tax receipts) to below three percent of their GDP.


The pact was called “stupid” by Romano Prodi because it makes it difficult to increase public spending when the economies of the countries which have adopted the Euro (the Eurozone) are in recession.